Inheritance tax when second parent dies: what is owed and how the thresholds carry over

How inheritance tax payable on second death UK estates is worked out

1. Start with the survivor's own threshold. The nil rate band is £325,000, and GOV.UK's published table runs that figure from 6 April 2009 through to 5 April 2031. It is the amount that passes before any tax at all, and it belongs to the person who has died rather than to the estate's beneficiaries.
2. Add whatever the first death did not use. GOV.UK states that where a person is married or in a civil partnership and their estate is worth less than their threshold, any unused threshold can be added to their partner's threshold when the partner dies. A first death that passed everything to the survivor leaves the whole band unused, which is where the familiar doubled figure comes from.
3. Add the residence nil rate band if a home is passing down. The additional threshold is £175,000 for deaths from 6 April 2020 to 5 April 2030. GOV.UK puts it plainly: a homeowner's tax-free threshold can increase to £500,000 where the home goes to children or grandchildren and the estate is worth less than £2 million. As with the main band, an unused residence band can pass to the survivor.
4. Apply the rate to what is left, and check the charity rate. The standard rate is 40% and it is charged only on the part of the estate above the threshold. Where 10% or more of the net value is left to charity, some assets are charged at a reduced rate of 36% instead, which is a real decision for an estate already close to that proportion.

Inheritance tax when second parent dies, UK rules: why the first death is quiet

A transfer between spouses or civil partners is exempt, so the estate of the first to die usually pays nothing however large it is. The family sees no bill and often no calculation, and the impression left behind is that inheritance tax is somebody else's problem. The threshold that went unused at that point does not disappear, but it does have to be claimed, by the executors of the second estate, with the first death's paperwork behind it.

That is why the demand for this question is phrased the way it is. The person searching is usually an adult child who has just become an executor, working out whether an estate that has always been described as modest is about to lose 40% of everything above a threshold they have not yet added up correctly.

What the transferred threshold is worth, and what can spoil it

Where the whole of the first threshold is unused, the second estate can have two full nil rate bands behind it, and two residence bands where a home is passing to children or grandchildren. Where the first death used part of the band, on a legacy to a child, say, or on a gift within seven years, only the unused proportion transfers.

The residence band has its own condition that the estate be worth less than £2 million, so a second estate that has grown past that figure can lose the part of the threshold the family was counting on most. Neither transfer happens by itself: both are claims the executors make.

What this page is, and what it is not

It sets out the published thresholds and the published rate, with a link to the page each one comes from, so an executor can follow the arithmetic before paying anybody to do it. It states no view on a particular estate, works out no liability, and drafts nothing.

Where the estate needs somebody to value it, claim the transferred bands and file the account, an enquiry from here goes to an accountant or a solicitor who does that work. This site is the introducer and never the adviser, and it is paid for the introduction rather than by any firm for a placement.

Common questions

Do both parents' thresholds always add up?

Only to the extent the first was unused. GOV.UK allows any unused threshold to be added to the surviving partner's threshold, so a first death that passed everything to the survivor transfers the whole band, while one that made a chargeable legacy transfers only the unused proportion. The claim is made by the second estate's executors.

Is the residence band automatic?

No. It applies where the home is left to children or grandchildren and, on GOV.UK's own condition, where the estate is worth less than £2 million. It is claimed rather than granted, and an estate that has grown past that figure can find the threshold it was relying on has gone.

How long do the executors have to pay?

Inheritance tax must be paid by the end of the sixth month after the person died, and HMRC charges interest after that. The practical difficulty is that the money is usually locked inside the estate until probate, which is why the interest question arrives so often alongside this one.

Does this site value estates or file the account?

No. It publishes the rules with their sources so you can see how a figure is arrived at, and passes an enquiry to the accountant or solicitor who does the valuation and the filing. It gives no advice on an estate and holds no client money.

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